Principles of Real Estate I PRACTICE EXAM

What is the starting point for any land surveyor who has been asked to perform a survey?

A review of existing historical records

What's the permanent marker used primarily for marking datums when measuring elevation?

Benchmark

Which act was the first to prohibit any exceptions for discrimination based on race or color?

Civil Rights Act of 1866

You have a listing agreement with Sam. Because of this, what's Sam's relationship to you?

Client

A property manager who _______ must have a license.

Collects rent

Which one of the following says that real estate acquired by either spouse during a marriage (in most cases) is considered community property?

Community property rights

Which of the following is NOT a characteristic of a corporation?

Corporations are tangible and nontaxable.

Real estate sales contracts must be valid, express, bilateral, ______, and executed or executory.

Enforceable

Which of the following is one of a listing agent's duties?

Maintain seller confidentiality.

What must a licensee do when preparing a CMA (or opinion of price) for a consumer?

Make a statement that the opinion isn't an appraisal.

Generally speaking, all Texas brokers have a responsibility to _____ trust funds.

Safeguard

Fee simple ______ includes two categories, which can be distinguished in part by the way in which ownership may be regained by the original grantor of the estate.

Defeasible

Norman buys Connie's Texas home, and in the sales contract, he specifies that the outdoor grill must stay with the home. Connie ends up taking the grill when she moves out. If Norman wants to sue Connie for taking the grill, he must do so within ______.

Four years

Several brokerages in a certain area agree to stop running advertisements in a local publication. What type of antitrust violation is this?

Group boycotting

Which statement describes a code of ethics?

Guidelines for conduct

Which of the following best describes a net listing?

The seller specifies a desired price for the property and agrees to pay the broker any amount received that's more than that price.

Mitch, your seller client, asked you about the tax ramifications of selling his townhome. What's your best response?

"That's not my area of expertise. You should ask your tax advisor."

Rhonda is an unrepresented buyer who's purchasing Tony's townhome. Gary represents Tony in the sale of his property. What's Rhonda's relationship to Gary?

A customer

What is the MLS?

A database of real estate information

What does a land surveyor produce?

A survey that includes a legal description and a survey sketch

In what way or ways do consumers compensate brokers for their services?

As a flat fee, fee for service, and/or percentage of sale

At what point must a listing agent disclose material facts to all parties involved in the transaction?

As soon as possible

Cheri wants to find the legal description for her property. Where could she look?

At a deed

Kurt bought a vacant lot in a development that was 85% completed. When he started working with the builder to lay out where the house and driveway would be, they found he would need an easement because his driveway would spill over onto the adjacent lot by a few feet. Kurt owns the _______ estate or tenement.

Dominant

In which of the following scenarios is impossibility of contract performance occurring?

Due to circumstances beyond their control, the parties can't legally or practically do what they've agreed to do.

Without this easement—usually involving access to a road—the owner requiring the right of passage would be landlocked.

Easement by necessity

Which power is used by the government upon the death of a property owner when no will, heirs, or creditors can be found?

Escheat

Jericho and Cindy, an unmarried couple, have three children, ages 3, 5, and 12. A seller's broker refuses to show them a house in a neighborhood where residents tend to be older, and no one else has children. Which protected class status applies?

Familial status

The list price is the price for which the _____ has agreed to sell a property.

Owner

Identify which of these actions is a prohibited activity for a real estate licensee in Texas.

Increasing the rent and security deposit for a family with seven children

Which of these is the most ethical reason to comply with fair housing laws?

It shows the societal strength in diversity

The owner of ABC Construction entered into a contract to build two homes for brothers Jack and John. The contract specified that the homes must be completed by April 1. ABC finished the homes on March 30. Of what is this an example?

Performance

Which area of real estate law covers how an agency relationship is created and explains the duties of an agent to the principal?

Law of agency

Which of these is a recommended strategy for a real estate professional who wants to avoid being asked to violate fair housing laws?

Let consumers know upfront that you adhere to fair housing laws.

After Wynn and Lianne enter into a contract for Lianne to buy Wynn's house, Lianne finds out that there are serious problems with the foundation. Lianne has already signed the contract. Which of the following can she do, if anything?

Lianne can declare the contract void, since a possible misrepresentation of the property invalidated her consent.

Which natural resource would involve surface rights?

Limestone

The _______ is the price at which an owner has offered to sell the property, and is the amount that's found on the MLS when a property is listed for sale.

List price

In a trust, the trustee is the person who ______.

Makes sure the terms of the trust are carried out

Jayne was tired of waiting for her subcontractor to get his part of the deal done. The agreed-upon deadlines came and went, and Jayne lost money waiting for the subcontractor to come through. She decided that if the subcontractor weren't going to honor his commitments, neither was she, so Jayne consulted with her attorney and then terminated the contract. This is an example of ______.

Rescinding the contract unilaterally

An apartment building is an example of what kind of property?

Residential

If a private individual owner doesn't own more than three single-family homes at one time, which exemption from the Fair Housing Act could apply?

Single-family housing sold or rented without the use of a broker

What is a sketch that shows the location, size, and shape of any improvements on a property being surveyed?

Spot survey

When both supply and demand increase, what tends to happen to prices?

Stay the same

What signifies that a survey is certified and represents a guarantee of accuracy?

Surveyor's stamp

Conversion means to ______.

Take money from an escrow account and use it for someone who is not entitled to it

Real estate licensees in Texas need to pay attention to updates from what agency, which is responsible for enforcing Texas Fair Housing Law?

The Texas Workforce Commission Civil Rights Division

Which of the following is NOT a valid way to terminate a listing agreement?

The buyer requests it

Sherman is a listing agent. At what point is he no longer obligated to present offers to his seller client?

The sale has closed.

Simon is a buyer represented by Peter. Peter shows Simon several homes currently on the market. What is Peter's relationship to the sellers, if he doesn't represent them?

The sellers are Peter's customers.

When state and federal laws differ, as they sometimes do with fair housing and/or human rights, which of these statements is true?

The state law may not remove rights granted to citizens under the federal law.

What would happen if you bought a house and later found out that there were unpaid liens against the property?

The unpaid liens could trigger a foreclosure on your property.

Which of the following is true about air rights?

They allow the owner to use the open space above buildings.

Which of the following is true about net listings?

They often involve a conflict of interest.

How do licensees create implied agency?

Through the parties' actions

Ellen and Isaac have a timeshare near the Grand Canyon. They'll be able to use it for two weeks every September for the next eight years. What type of timeshare is this?

Timeshare use

Which of the following best describes the purpose of a buyer agency agreement?

To identify the terms of the buyer agent/buyer agency relationship

In Texas, real estate licensure applicants can be rejected for several reasons, including failure to satisfy a current education, experience, or exam requirement within what time period from the application filing date?

Twelve months

Regarding the need for consent for a contract to be valid, which of the following exists when an act of persuasion overcomes another person's free will and judgment?

Undue influence

Which of these might bring a charge of illegal steering against a licensee?

When working with single female clients, Cassandra is careful to promote properties in neighborhoods she considers safe.

Can an unlicensed individual sell their own property without using the services of a listing agent?

Yes, unlicensed individuals may sell their own property.

Which one of these situations represents the illegal practice of redlining?

Hunter, a mortgage broker, refused to underwrite mortgage applications from applicants who want to buy in specific neighborhoods based on the neighborhood's demographics.

Which of the following phrases doesn't potentially discriminate against any protected class?

"Easy access to local shops"

James purchased five acres of land for $75,000. What was the cost per acre?

$15,000

Which of the following is the best example of a tie-in arrangement?

A business requires its clients to also purchase services from another business.

Alana and Michael want to build a 5,000-square-foot ranch home on two acres of land they just bought. Once the house is built, how many acres of land will remain unbuilt?

1.89 acres

What age does a person become eligible for real estate licensure in Texas?

18 years

How is timeshare ownership typically split?

52 weeks

What is the education requirement for first time renewals for sales agents in Texas?

90 hours of sales apprentice education (SAE) and 8 hours of TREC's legal updates

Which of the following is a true statement about the MLS and sellers?

It's rare for sellers to decline advertising their property on the MLS.

Jolene signs a contract to buy Harvey's home. Before closing, it's discovered that Jolene is only 16 years old. Because she's a minor, she's not considered legally competent to enter into a contract. Which of the parties can void the contract?

Jolene

What type of listing agreement provides the sellers with the opportunity to enter into listing contracts with multiple agents and still reserve the right to sell the property themselves, owing no commission?

Open listing

What might the government do if property owners fail to pay taxes on their property?

Place a lien on the property.

What type of language should be used to write contracts?

Plain language

"Separate property" is property most likely acquired ______.

Prior to marriage

When measuring elevations, what is used instead of a point of beginning?

Datum

Which of the following best describes a bilateral contract?

A contract that involves an exchange of consideration between two parties

Martha made an offer to buy Drake's home, and he accepted it. Under the terms of the agreement, Martha was supposed to make an earnest money deposit of $10,000, but she only put down $5,000. Drake accepted the lesser deposit, and the sale was ultimately finalized. This is an example of ______.

Accepting partial performance

To what properties does the Texas seller's disclosure of property condition law apply?

All single-family residential properties

Which of these is usually a brass marker that is used to mark a datum?

Benchmark

Which of the following statements is true regarding community property rights and property ownership?

Both partners may own other properties purchased before the marriage separately (in severalty), but any properties purchased during their marriage are owned equally.

An unrepresented ______ who's a party to a transaction is known as a principal.

Customer

What does the metes and bounds system use to develop a property's legal description?

Compass headings and directions

The process in which the government actually takes someone's property through the power of eminent domain is called __________.

Condemnation

What's the purpose of PMI?

Covers the gap between the actual loan amount and 80% of the LTV

A registered land surveyor is preparing a plat map that will show elevations and boundaries for a multi-level condominium complex. What is used as a reference point for measuring elevation?

Datum

What type of involuntary lien is placed on a person's estate after their death if there are unpaid debts to creditors?

Deceased person's debt lien

Over which of the following areas do local authorities have no police power?

Deed restrictions

Johnstone's Realty is a new discount, menu-based brokerage firm. Its approach usually results in a lower listing commission rate than other firms offer. Johnstone's also offers a lower cooperating brokerage split than most other firms. Business is booming for Johnstone's, and the remaining firms in town are concerned. These brokers agree to not show Johnstone's listings to their buyer clients. What is this an example of?

Group boycotting

Jim is a listing agent. What offers must he present to his client, and when?

He must present all offers as soon as is practical.

In the real estate business, whose primary role is to perform a visual inspection of a property's structure, systems, and site conditions?

Home inspector

Which does the following describe? "A legally binding document that creates a lien or security interest on a property and gives the lender the right to foreclose in the event of buyer default."

Mortgage

How do you determine the cost of purchasing land?

Multiply the land area by the cost per unit

Landon is the listing agent for Maury's property. Maury is moving out of state for a new job, so the house will be vacant for some time, depending on how long it takes to sell. Maury is pretty adamant about not having a sign in his yard, especially after he moves. Landon follows Maury's wishes, but a month after Maury moved, there hasn't been any movement on the property. Landon places a sign in the yard, hoping it will drum up some interest. Is this okay?

No, Landon shouldn't place a sign on Maury's property without Maury's written permission.

Jared, a seller, has found his own buyer and wants to terminate his exclusive right-to-sell listing agreement with Sue, his listing broker. Can he do so without penalty?

No, because the listing agreement is contractually binding.

Can a real estate license that has been expired for more than six months be renewed in Texas?

No, the license holder must apply for a new license

Four brokerage firms operate in the same small city as Jackson's firm. All the firms charge approximately the same listing commission and pay approximately the same cooperating commission to the selling broker. The commission splits within each firm are also similar. Is this an antitrust violation? Why or why not?

Not necessarily. The fact that the firms' commission rates and splits are similar doesn't necessarily mean they agreed to fix those values.

Parker entered into a contract with seller Derrick to buy Derrick's home. Before finalizing the sale, Parker had a change of heart and decided to renounce all worldly possessions. He no longer wanted to buy Derrick's home. With Derrick's approval, Parker is released and Parker's brother, Tom, takes Parker's place as the buyer in the purchase contract. Of what is this an example?

Novation

According to the Department of Justice, an agreement between competitors to establish or adhere to uniform price discounts is a type of which antitrust violation?

Price fixing

According to the U.S. Department of Justice, which type of antitrust violation is an agreement between competitors to eliminate discounts to all customers or certain types of customers?

Price fixing

In the real estate business, whose primary role is to estimate property value based on established valuation guidelines?

Real estate appraiser